Second-house loans in greater Taipei subject to 70% limitation

TAIPEI, Taiwan -- The Central Bank of China of the Republic of China (CBC) yesterday announced that loans extended by financial institutions to applicants to buy their second houses in Taipei City and 10 local cities under the jurisdiction of the Taipei County Government won't be allowed to exceed 70 percent of the apprised house value, effective today.

The CBC announced the selective credit control mainly to dampen the runaway housing prices manipulated by speculative investors.

Under the policy, those who purchase more than one houses in Taipei City and such 10 cities in Taipei County as Banqiao, Sanchong, Zhongho, Yongho, Xinzhuang, Xindian, Tucheng, Luzhou, Shulin and Xichih will be subject to the selective control, and will not be allowed to enjoy any grace period for repayment.

Financial institutions involved include banks, credit cooperative unions, credit departments of farmers or fishermen associations, life insurance firms and life insurance division of Chunghua Post Co., according to CBC.

CBC Governor Perng Fai-nan stressed at a press conference yesterday that the selective credit control is designed to curb exorbitant housing prices of some specific areas.

Local rehouse firms noted that the selective credit control is expected to constitute a major impact on speculative investors in the realty market, effectively curbing the spiraling housing prices in the greater Taipei area.

Also yesterday, the CBC raised its key interest rates by 0.125 of a percentage point on grounds that domestic economy has shown signs of recovery from a global recession, the CBC said in a statement.